FDIC Federal Register Citations

The Flood Insurance Agency

Having just returned from the National Flood Insurance Conference in Chicago, and having attended the workshop for lenders, I am more convinced than ever that there are two subjects that lenders are grossly violating the mandatory purchase guidelines and the flood insurance law as passed by congress.

1. When a lender purchases insurance on behalf of a borrower the majority of lenders are purchasing a single interest policy. The borrower is not a named insured on this type of policy and has no protection for their equity interest in the property nor any rights whatsoever. FEMA’s lender placed alternative, the MPPP, on the other hand, is specifically a dual interest policy protecting the equity of the borrower and a policy wherein the borrower has the same rights as if they had purchased a voluntary policy themselves. In fact the MPPP policy wording is the same as the voluntary policy. Lender single interest policies should not be allowed and should be considered a violation as they are not purchased on behalf of the borrower and they do not offer the same or better policy terms to the borrower.

2. When most lenders force place insurance with the most often used programs currently offered by the industry the borrower is being charged for the first 45 days of coverage. The law does not permit this yet almost all lenders who force place using a policy other than FEMA’s MPPP do in fact charge for the first 45 days of coverage.

I suggest that lenders are put on notice that neither of the above practices are allowed and are subject to civil monetary penalties.

Evan Hecht
The Flood Insurance Agency
450 Corporate Dr., Suite 101
P O Box 7578
Kalispell, MT 59904